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Visit this website to read about lobbying.

In the early 2000s, about 40 million people in the United States were eligible for Medicare , a government program that provides health insurance for those 65 and older. On some issues, the elderly are a powerful interest group. They donate money and time to political campaigns, and in the 2012 presidential election, 70% of those over age 65 voted, while just 49% of those aged 18 to 24 cast a ballot, according to the U.S. Census.

In 2003, Congress passed and President George Bush signed into law a substantial expansion of Medicare that helped the elderly to pay for prescription drugs. The prescription drug benefit cost the federal government about $40 billion in 2006, and the Medicare system projects that the annual cost will rise to $121 billion by 2016. The political pressure to pass a prescription drug benefit for Medicare was apparently quite high, while the political pressure to assist the 40 million with no health insurance at all was considerably lower. One reason might be that senior citizens are represented by AARP , a well-funded and well-organized lobbying group, while there is no umbrella organization to lobby for those without health insurance.

In the battle over passage of the 2010 Affordable Care Act (ACA) , which became known as “Obamacare,” there was heavy lobbying on all sides by insurance companies and pharmaceutical companies. However, a lobby group, Health Care for America Now (HCAN) , was financed by labor unions and community groups and was organized to offset corporate lobbying. HCAN, spending $60 million dollars, was successful in helping to get the legislation passed which added new regulations on insurance companies and a mandate that all individuals will obtain health insurance by 2014. The following Work It Out feature further explains voter incentives and lobbyist influence.

Paying to get your way

Suppose Congress proposes a tax on carbon emissions for certain factories in a small town of 10,000 people. The tax is estimated to reduce pollution to such an extent that it will benefit each resident by an equivalent of $300. The tax will also reduce profits to the town’s two large factories by $1 million each. How much should the factory owners be willing to spend to fight the passage of the tax, and how much should the townspeople be willing to pay to support it? Why is society unlikely to achieve the optimal outcome?

Step 1. The two factory owners each stand to lose $1 million if the tax is passed, so each should be willing to spend up to that amount to prevent the passage of the tax, a combined sum of $2 million. Of course, in the real world, there is no guarantee that lobbying efforts will be successful, so the factory owners may choose to invest an amount that is substantially lower.

Step 2. There are 10,000 townspeople, each standing to benefit by $300 if the tax passes. Theoretically, then, they should be willing to spend up to $3 million (10,000 × $300) to ensure passage. (Again, in the real world with no guarantees of success, they may choose to spend less.)

Step 3. It is costly and difficult for 10,000 people to coordinate in such a way as to influence public policy. Since each person stands to gain only $300, many may feel lobbying is not worth the effort.

Step 4. The two factory owners, however, find it very easy and profitable to coordinate their activities, so they have a greater incentive to do so.

Questions & Answers

in an open economy, the GDP is measured as ?
jacobs Reply
what is Labour of supply.
Eshmel Reply
it is called supply of labour
Emmanuel
it is the total number of those the producer is expected to employ at a given time and at an existing wage rate
Emmanuel
if the price of yam increases what will happen to demand curve?
Lawal Reply
the demand curve will decrease
Fatmah
with table and diagrametic illustration
Usama Reply
ok
Mustafe
if the price elasticity of demand for a commodity is zero the demand curve is
Aryan Reply
the demand curve is inelastic
Emmanuel
this is because price bring about a lesser change in quantity demanded
Emmanuel
how are we going to draw scale of preference
Achor Reply
how do we identify choice
Achor
how do we identify opportunity cost
Achor
opportunity cost is the forgone alternative. in oder words, it is the sacrificed goods or service for another. thus, the item you did not buy with the resources you have thereby buying another one is called opportunity cost. thanks
John
IAC curve is geueraly
Subham Reply
what are the benefits or tourism?
Maake Reply
please I don't understand the division of labor increase
Dery Reply
Labour increasing according to demand of company or as the condition of profit and standards or weight of working level ,,,,
SHOM
Please can someone help me With the demand of labour.
Eshmel
what are the basic concept of economics
Busanga Reply
end mean and scarcity
Dery
What the term economics?
Nuran Reply
economic is the study of mankind in the ordinary business life
Dery
want to find how can a geography teacher can contribute to the economic development of a country .
Bernadette Reply
how are u
Usama
i am fine
Purnima
it can help to prevent world wars 😂😂😂😂
Vedaant
it can help to prevent world wars 😂😂😂😂
Vedaant
what is labour
Ab Reply
labour is the skill of a person who knows the tinitiol thinks
Mustafe
labour can define both physical and mental effort of a man towards production
Chinedu
what is want, cost,
Muhammad Reply
during reccessionary and unemployment in a country which kind economic policy measure do we adopt
samuel
want is a mere demand of a commodity which is not backed by purchasing power.
marcus
ok
Tetteh
ok
Mustafe
what demand
Mustafe
demand is d desire backed up by d ability to pay
Emmanuel
demand is the purchases power
Dery
in what ways is monopolist competition different from perfect competition
Juliana Reply
The principal difference between these two is that in the case of perfect competition the firms are price takers, whereas in monopolistic competition the firms are price makers. Perfect competition is not realistic, it is a hypothetical situation, on the other hand, monopolistic competition is a pra
marcus

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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